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Communications Commission's Enforcement Bureau Issues Memorandum Opinion and Order Regarding Maritime Communications/Land Mobile, LLC(Targeted News Service Via Acquire Media NewsEdge) WASHINGTON, Sept. 11 -- The Federal Communications Commission's Enforcement Bureau issued the following memorandum opinion and order: In the Matter of MARITIME COMMUNICATIONS/LAND MOBILE, LLC, DEBTOR-IN-POSSESSION Application to Assign Licenses to Choctaw Holdings, LLC MARITIME COMMUNICATIONS/LAND MOBILE, LLC WT Docket No. 13-85 FCC File No. 0005552500 Application for New Automated Maritime Telecommunications System Stations Order to Show Cause, Hearing Designation Order, and Notice of Opportunity for Hearing WT Docket No. 13-85 FCC File No. 0005552500 FCC File Nos. 0004153701 and 0004144435 FCC File No. 0002303355 EB Docket No. 11-71 File No. EB-09-IH-1751 FCC File Nos. 0004030479, 0004144435, 0004193028, 0004193328, 0004354053, 0004309872, 0004310060, 0004314903, 0004315013, 0004430505, 0004417199, 0004419431, 0004422320, 0004422329, 0004507921, 0004153701, 0004526264, 0004636537, and 0004604962 MEMORANDUM OPINION AND ORDER Adopted: September 10, 2014 Released: September 11, 2014 By the Commission: I. INTRODUCTION AND EXECUTIVE SUMMARY 1. This Memorandum Opinion and Order addresses requests to permit the assignment of certain Automated Maritime Telecommunications System (AMTS) spectrum licenses that are the subject of a pending hearing regarding the basic character qualifications of the licensee, Maritime Communications/Land Mobile, LLC (MCLM). With one narrow exception, we deny the requests. 2. We find that the public interest supports removing from the ambit of the hearing an application to assign a spectrum license from MCLM to the Southern California Regional Rail Authority (SCRRA) to be used for positive train control (PTC), a statutorily-mandated technology directly promoting rail safety, which the Commission previously identified for possible removal. We decline, however, to terminate the hearing or to remove from its ambit other pending applications proposing the assignment of spectrum licenses from MCLM, including proposed assignments to certain critical infrastructure industry entities. II. BACKGROUND 3. MCLM acquired four AMTS geographic licenses in FCC Auction 61 with a small business bidding credit. Subsequent investigation revealed, however, that MCLM may have obtained a bidding credit to which it was not entitled, and engaged in other misconduct. Consequently, the Commission initiated a hearing proceeding to determine whether MCLM's licenses should be revoked. MCLM filed for bankruptcy protection following the initiation of the hearing, and now seeks to assign its AMTS licenses to Choctaw Holdings, LLC (Choctaw) in furtherance of a Bankruptcy Court-approved Plan of Reorganization. MCLM and Choctaw (the Applicants) request that we terminate the hearing regarding MCLM's basic qualifications, and approve the proposed assignment of the AMTS licenses to Choctaw, pursuant to the Second Thursday exception to our Jefferson Radio policy. For reasons discussed below, we decline to do so, and we will instead withhold action on the MCLM-Choctaw assignment application (Choctaw Application) pending resolution of the designated issues in the hearing. As noted, however, we remove from the hearing the application to assign a spectrum license from MCLM to SCRRA for PTC (SCRRA Assignment Application). A. MCLM's Auction 61 Application 4. AMTS spectrum, which consists of two spectrum blocks in the 217/219 MHz bands, initially was assigned on a site-by-site basis. MCLM holds more than 50 site-based AMTS licenses. Site-based AMTS authorizations terminate automatically if the station is not constructed and placed in operation within two years from the date of the license grant, or upon permanent discontinuance of service. 5. The Commission subsequently adopted geographic licensing for AMTS stations, with one geographic license per spectrum block in each of the ten areas into which the Commission divided the country. Under the rules for the licensing of AMTS through competitive bidding, a "small business," defined as an entity with average annual gross revenues of no more than $15 million for the three years preceding the auction, was eligible to receive a bidding credit of 25 percent; and a "very small business," defined as an entity with average annual gross revenues of no more than $3 million for the three preceding years, was eligible for a 35 percent bidding credit. 6. MCLM was the high bidder for four AMTS geographic licenses in Auction 61 in 2005. In both its short-form application filed in advance of the auction and its post-auction long-form application, MCLM represented that Sandra DePriest (Ms. DePriest) was MCLM's 100 percent owner and its "sole officer, director and key management personnel." MCLM claimed eligibility to receive a bidding credit of 35 percent because the gross revenues of Ms. DePriest and her affiliates were below the $3 million threshold. MCLM did not list Ms. DePriest's husband, Donald DePriest (Mr. DePriest), as a disclosable interest holder, and did not include the gross revenues of Mr. DePriest or companies under his control in calculating its bidding credit eligibility. 7. Warren C. Havens and affiliated entities (collectively, SkyTel) filed a petition to deny MCLM's long-form application. SkyTel argued that MCLM was unqualified to be a Commission licensee because, inter alia, MCLM had failed to disclose its real party in interest and other information relevant to its bidding credit eligibility, and engaged in other misconduct. In 2006, the Public Safety and Critical Infrastructure Division (PSCID) of the Wireless Telecommunications Bureau (Bureau) denied the SkyTel petition because it found SkyTel's allegations of wrongdoing to be unsubstantiated. However, PSCID agreed with SkyTel's argument that MCLM's failure to list Mr. DePriest as a disclosable interest holder contravened the Commission's "spousal affiliation rule" and stated that it would separately address Mr. DePriest's revenues and their relevance to MC/LM's eligibility for a bidding credit. 8. Thereafter, MCLM amended its long-form application to provide revenue data for Mr. DePriest and his affiliates. It represented that his one revenue-producing affiliate had average gross revenues for the prior three years of $9,838,403. MCLM also argued that the spousal affiliation rule should not require the attribution to MCLM of Mr. DePriest's gross revenues because he had no ownership interest in, and was neither an officer nor a director, of MCLM, and he and Ms. DePriest "live separate economic lives." 9. The Bureau's Mobility Division (MD) concluded that the spousal affiliation rule did require the attribution of Mr. DePriest's revenues to MCLM, and accordingly directed that MCLM be awarded only a reduced bidding credit of 25 percent. After MCLM made a payment to reflect the reduction of its bidding credit, the Bureau granted MCLM's long-form application. 10. In 2007, the MD denied SkyTel's petitions for reconsideration of the PSCID and MD actions denying its petition to deny, concluding that SkyTel had not identified any error in those decisions. The MD did, however, note inconsistencies in MCLM's filings regarding Mr. DePriest's attributable revenues that - while they did not appear to affect MCLM's entitlement to a 25 percent bidding credit or constitute grounds to deny MCLM's Auction 61 application - raised concerns regarding MCLM's "failure to provide accurate information on the first attempt." It cautioned MCLM that the denial of SkyTel's petitions for reconsideration was without prejudice to further inquiry and enforcement action. SkyTel filed an application for review. 11. Between 2008 and 2011, MCLM filed several applications proposing to partition and disaggregate portions of its geographic licenses to various entities, including SCRRA and a number of electric, gas, and oil companies (collectively, Assignment Applications). SkyTel filed petitions to deny each of the Assignment Applications, arguing primarily that MCLM should not be permitted to assign licenses that may be subject to revocation if MCLM is ultimately found to be unqualified. B. Designation for Hearing 12. Further inquiry by the Wireless Telecommunications and Enforcement Bureaus yielded information indicating that Mr. DePriest may have been actively involved in the management of MCLM and that MCLM had failed to disclose dozens of entities that Mr. DePriest controlled or in which he served as an officer or director, with revenues that may have rendered MCLM ineligible for any bidding credit. On April 19, 2011, the Commission released an Order to Show Cause, Hearing Designation Order, and Notice of Opportunity for Hearing (HDO) commencing a proceeding before an Administrative Law Judge (ALJ) to determine whether MCLM has the requisite character qualifications to be a Commission licensee. The HDO directed MCLM to show cause why its AMTS licenses should not be revoked, and designated issues for inquiry regarding, inter alia, whether MCLM failed to disclose that Mr. DePriest was a real party in interest, whether MCLM failed to disclose all of the attributable interests and revenues relevant to its claim to a bidding credit, and whether MCLM engaged in misrepresentation or lacked candor in its Auction 61 application and subsequent filings pertaining to it. 13. The HDO also designated the issue of whether MCLM's pending assignment applications should be granted. With respect to the SCRRA Assignment Application, which proposes to partition and disaggregate spectrum to SCRRA for PTC use, the Commission noted that the Rail Safety Improvement Act of 2008 (RSIA) established a December 31, 2015, deadline for certain freight and commuter railroads to install and operate PTC systems. In footnote 7 of the HDO (Footnote 7), the Commission said, "Given the potential safety of life considerations involved in the positive train control area..., we will, upon an appropriate showing by the Parties, consider whether, and if so, under what terms and conditions, the public interest would be served by allowing the [SCRRA Assignment Application] to be removed from the ambit of this Hearing Designation Order." In response, SCRRA and MCLM filed showings seeking removal of the SCRRA Applications from the hearing. The proposed assignees in the other Assignment Applications, i.e., the electric utilities and oil and gas companies (CII Companies), supported Footnote 7 relief for SCRRA, but also sought reconsideration of the HDO because Footnote 7 did not provide them the same opportunity to seek the removal of their applications (CII Applications) from the hearing. 14. In addition, the HDO designated an issue - denominated Issue (g) in the HDO ordering clauses - of whether the authorizations for any of MCLM's site-based AMTS stations automatically terminated due to non-construction or permanent discontinuance of operation. In a number of pleadings filed over the years, SkyTel alleged, and MCLM denied, that site-based licenses held by MCLM terminated automatically due to a failure to timely construct the authorized station or permanent discontinuance of operation at the station. The Commission concluded in the HDO that "there is a disputed issue of material fact with respect to whether the licenses for any of [MCLM's] site-based AMTS stations have cancelled automatically for lack of construction or permanent discontinuance of operation." C. Subsequent Developments 15. The Assignment Applications are subject to the Commission's Jefferson Radio policy, which provides that a license may not be assigned or transferred when the licensee's qualifications to hold it are in issue. The policy provides a deterrent to licensee misconduct by preventing a licensee from avoiding the loss that would result from revocation or non-renewal of a license. The Commission has recognized an exception to the Jefferson Radio policy in its Second Thursday doctrine, which permits the Commission, in the exercise of its discretion, to grant a license assignment application, notwithstanding that the licensee's basic qualifications are in issue, if the licensee is in bankruptcy, the assignment will benefit innocent creditors of the licensee, and the individuals charged with misconduct "will have no part in the proposed operations and will either derive no benefit from favorable action on the applications or only a minor benefit which is outweighed by equitable considerations in favor of innocent creditors." As the United States Court of Appeals for the D.C. Circuit explained in LaRose v. FCC, application of the Second Thursday doctrine requires "an ad hoc balancing of the possible injury to regulatory authority that might flow from wrongdoers' realizing benefits against the public interest in innocent creditors' recovery from the sale and assignment of the license to a qualified party." 16. On August 1, 2011, MCLM filed a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court, Northern District of Mississippi (Bankruptcy Court), and notified the presiding ALJ and parties to the Commission hearing of its intent to invoke Second Thursday to terminate the hearing. The Bankruptcy Court confirmed MCLM's proposed plan of reorganization (Plan) on January 11, 2013. As the first step in implementing the Plan, MCLM and Choctaw on January 23, 2013 filed the Choctaw Application, which proposes that Choctaw, a newly-formed limited liability company comprised of four of MCLM's creditors, would obtain all of MCLM's licenses, and would then replace MCLM as the assignor in the pending Assignment Applications and seek to find buyers for the remainder of MCLM's licensed spectrum assets. 17. The Applicants request that the Choctaw Application be granted under the Second Thursday doctrine. They argue that all of the prerequisites for Second Thursday relief are present: they note that MCLM is in bankruptcy, and claim that the DePriests would have no role with Choctaw and would receive no cognizable benefit from the proposed transaction. The Applicants also argue that good cause exists for the Commission to waive its rules as necessary to permit the assignment of any site-based licenses that may have cancelled automatically due to a failure to construct or a permanent discontinuance of service. They further assert that if the Commission does not grant the Choctaw Application pursuant to Second Thursday, it should grant the SCRRA and the CII Applications pursuant to Footnote 7. 18. On March 21, 2013, the presiding ALJ, as a matter of administrative efficiency, stayed the hearing with respect to the basic qualifications issues designated against MCLM, noting that a decision on the Choctaw Application and the associated requests for relief might moot those issues. Since the question of whether any of MCLM's site-based licenses have terminated automatically because of a failure to construct or a permanent discontinuance of operation is independent of the basic qualifications issues, however, and would not be rendered moot by the grant of Second Thursday relief unless accompanied by a grant of the requested rule waiver, the ALJ directed that the hearing proceed with respect to Issue (g). 19. On March 28, 2013, the Bureau issued a Public Notice establishing a pleading cycle for the filing of petitions to deny the Choctaw Application as well as responsive pleadings, comments, and reply comments. The Public Notice asked for comment on whether the Applicants' request for Second Thursday relief should be granted, whether the assignment of any of MCLM's licenses should be approved pursuant to Footnote 7, whether the Commission should waive the construction and discontinuance-of-service rules for MCLM's site-based licenses, and whether the hearing should be terminated in whole or in part. III. DISCUSSION A. Second Thursday Request 20. We deny the requests to terminate the hearing and grant the Choctaw Application pursuant to the Second Thursday doctrine because we find that the Choctaw Application does not meet a threshold criterion for Second Thursday relief. Specifically, we find that the Applicants have failed to demonstrate that individuals suspected of misconduct "will either derive no benefit from favorable action on the applications or only a minor benefit which is outweighed by equitable considerations in favor of innocent creditors." As we discuss below, we find that there is a substantial possibility that granting the application would permit the DePriests to obtain a benefit that is neither minor nor incidental by releasing Mr. DePriest from his obligations under his personal guarantees of loans to MCLM. Mr. DePriest could escape a potential liability most conservatively estimated to be $8 million because the creditors could be fully repaid from the proceeds from the assignment of the licenses, and would therefore have no basis to look to Mr. DePriest for recovery under his personal guarantees. 21. In the Choctaw Application, the Applicants acknowledge that a "possible, albeit indirect, benefit that may accrue to the DePriests is the satisfaction of a personal loan guarantee provided by Mr. DePriest to the extent that MCLM, as primary obligor, is able to pay the holders of those claims in full pursuant to the Plan." They assert that this does not foreclose Second Thursday relief, however, because "the elimination of potential secondary liability, such as Mr. DePriest's personal loan guarantee, is an incidental benefit" that, under Commission precedent, "is 'outweighed by the equitable considerations favoring innocent creditors.'" In addition, they later argue that the DePriests will not receive a benefit from the release of Mr. DePriest from liability under his personal loan guarantees because there has been no such release. We do not find these arguments to be persuasive. 22. First, we agree with the Enforcement Bureau that the cases relied upon by Choctaw for the proposition that relief from a secondary liability does not militate against Second Thursday relief do not support that proposition. To the contrary, it has always been incumbent upon the parties invoking Second Thursday to "show that those principals suspected of wrongdoing will derive no substantial benefit from the sale, either direct or indirect." The Commission has repeatedly recognized that the possible elimination or reduction of an alleged wrongdoer's secondary liability may outweigh the interest in protecting innocent creditors and thus preclude Second Thursday relief. For example, in Capital City Communications, Inc. (Capital City), the Commission denied Second Thursday relief because licensee stockholders charged with wrongdoing would be relieved of liability as guarantors on obligations in excess of $51,000, which represented more than 20 percent of the proposed purchase price, which the Commission held "manifestly is far more than a 'minor' benefit." 23. Moreover, it is precisely because the creditors retain the ability to sue Mr. DePriest under his personal guarantees that he may receive a substantial benefit from a grant of Second Thursday relief. Estimates of the amount of Mr. DePriest's liability on his loan guarantees range from at least $8 million to more than $11 million. The record also indicates that the proceeds from the assignment of MCLM's spectrum licenses to third parties would be more than enough to repay MCLM's creditors in full. Thus, a grant of Second Thursday relief here could very well discharge Mr. DePriest's personal liability, resulting in significant potential savings. Under Commission precedent, this amount is too large to be deemed minor or incidental. 24. By virtue of our denial of Second Thursday relief to the Applicants, the Choctaw Application shall remain pending, and the hearing regarding MCLM's basic qualifications shall continue. We direct the Bureau to continue to defer action on the Choctaw Application pending resolution of the matters before the ALJ. We also expect the presiding ALJ to rescind his partial stay of the proceeding, and to proceed with the adjudication of the issues pertaining to MCLM's basic qualifications. B. Footnote 7 Relief 25. Having determined that the Choctaw Application is not eligible for Second Thursday relief, and that, consequently, the hearing regarding MCLM's basic qualifications should continue, we now consider whether any applications should be removed from the ambit of the hearing pursuant to Footnote 7. For reasons discussed below, we conclude that the SCRRA Applications should be removed from the hearing in order to facilitate SCRRA's implementation of PTC, but that the CII Applications should not be removed. 1. SCRRA Applications 26. SCRRA argues that the removal and grant of the SCRRA Applications is "plainly warranted in view of the federal PTC mandate, the overriding public safety considerations at stake here and the well-established Federal transportation safety policies that will be advanced" by such action. It also notes that grant of the SCRRA Applications would not terminate the MCLM hearing and, since only a relatively small portion of MCLM's spectrum holdings would be removed from the hearing, the Commission would retain the ability to impose a meaningful penalty on MCLM that would avoid undermining the deterrent provided by the Jefferson Radio policy. Other parties and commenters, except SkyTel, generally support granting Footnote 7 relief to SCRRA. As discussed below, we remove the SCRRA Applications from the hearing, and direct the Bureau to process the applications, consistent with this Memorandum Opinion and Order and the Commission's Rules. 27. We reject SkyTel's arguments that granting Footnote 7 relief to the SCRRA Applications would violate the Communications Act of 1934, as amended (Act) or the Commission's Rules because it would supersede SkyTel's pending application for review of the PSCID and MD decisions upholding the initial grant of the Auction 61 AMTS licenses to MCLM, and SkyTel's petition to deny the SCRRA Applications. As an initial matter, we note that the Commission has denied petitions to deny an assignment application where the licensee's qualifications are in issue and the application was filed pursuant to the Second Thursday doctrine, and we see no basis for distinguishing our action here simply because it is based on Footnote 7 rather than Second Thursday. Moreover, the statutory provisions cited by SkyTel - Sections 309(d) and 405 of the Act - give parties with standing a right to file petitions to deny and petitions for reconsideration, respectively, but they do not give a petitioner a vested right to any particular outcome, and neither those statutory provisions nor any Commission rule precluded the Bureau from issuing the Public Notice and inviting additional comment on matters that were earlier addressed in petitions to deny filed by SkyTel prior to the opening of this docket. Neither applicants, nor licensees generally, have a vested property right in licensed spectrum, so a petitioner such as SkyTel can assert no greater interest. 28. SkyTel also argues that Footnote 7 is "facially defective and ultra vires" as a substantive rule created without public notice, comment, and Federal Register publication; and that granting Footnote 7 relief to the SCRRA Applications would be arbitrary, capricious, and an abuse of discretion. We disagree. Neither the Jefferson Radio policy nor any exception thereto was adopted through notice-and-comment rulemaking or codified in the Commission's Rules, and SkyTel fails to provide any legal basis for its assertion that the Commission may not act pursuant to Footnote 7 without a rulemaking proceeding. It is well established that an agency has broad discretion in choosing to proceed via adjudication or rulemaking as it thinks best. We do agree with SkyTel that it is incumbent upon the Commission to provide a clear rationale for establishing a new exception to the Jefferson Radio policy. 29. PTC is a potentially transformative technology that is intended to save lives, prevent injuries, and avoid extensive property damage. PTC systems will be implemented with the aim of reducing the risk of rail accidents caused by human error, preventing train-to-train collisions, over-speed derailments, incursions into established work zone limits, and the movement of a train through a switch left in the wrong position. Railroads have chosen to implement PTC using radio spectrum to create wireless networks that will enable real-time information sharing between trains, rail wayside devices, and "back office" applications, regarding train movement authorities, speed restrictions, train position and speed, and the state of signal and switch devices. It is a priority of the Commission to facilitate this important safety measure, and we have endeavored to develop policies to facilitate the rail industry's acquisition and use of spectrum for PTC in the public interest. FCC staff has worked, and will continue to work, with the Department of Transportation, the National Transportation Safety Board, railroads, and spectrum licensees to identify and facilitate secondary market transactions to make spectrum available for PTC operations. 30. PTC-220, LLC (PTC-220), a joint venture of the seven Class I freight railroads in the United States, has begun the development and deployment of interoperable PTC communications systems using spectrum in the 220-222 MHz band. It is also leasing spectrum to non-member railroads to implement PTC, but notes that its spectrum may not be sufficient to provide robust PTC operations in some areas of heavy traffic, such as the Los Angeles basin where SCRRA operates. SCRRA notes that it has executed a temporary spectrum lease with PTC-220, but this does not provide a long-term solution to its PTC spectrum needs. 31. We conclude that the removal of the SCRRA Applications from the hearing would serve the public interest by significantly promoting rail safety of life and property, and that the SCRRA Applications should be processed rather than left in abeyance for an additional indefinite period, due in part to the pending statutory deadline for PTC implementation. Under the circumstances presented, allowing the SCRRA Applications to be addressed outside the hearing pursuant to Footnote 7 is a tailored response to a narrow and demonstrated need, involves only a limited amount of spectrum in a single geographic area, and is unlikely to undermine the deterrent to licensee misconduct posed by the Jefferson Radio policy. We note that we are confining Footnote 7 relief to applications proposing to use the spectrum license for PTC, a service statutorily mandated for protecting life and property, where the spectrum in question is uniquely suited to enable system interoperability as part of the frequency range that is being deployed nationwide for PTC. We also note that SCRRA, which operates in one of the most populous regions of the country in an area where rail safety is of particular importance and concern, filed its assignment application prior to release of the HDO, and thus may have relied on access to the spectrum without notice of that obstacle to the transaction. 32. We are not persuaded by SkyTel's arguments to the contrary. SkyTel says that allowing the SCRRA Assignment Application to be removed from hearing and then granted would undermine the AMTS allocation and licensing process, but does not explain why it would do so any more than would any secondary markets transaction. SkyTel also argues that SCRRA's asserted need for the license to be assigned by MCLM is not genuine, and that nothing in the record indicates that AMTS spectrum is better suited to PTC than other spectrum that SCRRA might acquire. We disagree. The record shows that the railroad industry has coalesced around three specific frequency bands, ranging from 217.6 MHz to 222 MHz, for implementation of PTC. The nationwide use of 220-222 MHz frequencies for PTC by PTC-220, coupled with the critical need to ensure PTC interoperability, makes AMTS spectrum particularly suitable for PTC use. Both the Federal Railroad Administration and PTC-220, among other commenters, support SCRRA's claim that obtaining the spectrum license it seeks to acquire from MCLM is vital. SkyTel's argument that SCRRA has no real need for such spectrum is simply contrary to the weight of the evidence. 33. Given that we are removing the SCRRA Applications from the hearing pursuant to Footnote 7, we are not constrained by the specific limitation imposed by Second Thursday that a wrongdoer derive no more than a minor benefit which is outweighed by equities favoring innocent creditors. We are mindful, however, that the exceptions to the Jefferson Radio policy that have been recognized to date generally require assurance that suspected wrongdoers will not avoid a monetary penalty if the underlying application is granted. In assessing whether the public interest would be served by granting Footnote 7 relief to the SCRRA Applications, we have considered the possibility that a distribution of the proceeds from the transaction to MCLM's creditors might operate to reduce Mr. DePriest's personal liability on his loan guarantees. The record indicates, however, that, even if so, Mr. DePriest would still be subject to a substantial personal liability. We find that, on balance, this partial reduction in his total liability is outweighed by the public interest in permitting the assignment of a spectrum license to SCRRA to implement a life-saving, positive train control system as required by Congress. 2. CII Applications 34. The CII Companies contend that, like SCRRA, they need spectrum for what they argue are public safety-related communications, such as Supervisory Control and Data Acquisition (SCADA) communications by oil and gas companies or smart grid deployment by electric utilities, to comply with federal or state requirements. They add that they, like SCRRA, entered into agreements with MCLM in good faith and for fair market value to acquire needed spectrum unavailable elsewhere, and that they are not themselves accused of any wrongdoing. In addition, the record reflects support among other commenters, other than SkyTel, for extending Footnote 7 relief to the CII Companies. As discussed below, we decline to grant Footnote 7 relief to the CII Companies because the CII Applications are readily distinguished from the SCRRA Applications, and extending Footnote 7 relief to other applications would not serve the public interest. 35. As a procedural matter, we dismiss the petitions for reconsideration of Footnote 7 on the grounds that they are petitions for reconsideration of a hearing designation order, which is an interlocutory ruling. We disagree with the CII Companies' argument that their petition comes within the exception in Section 1.106(a)(1) of the Rules, allowing "[a] petition for reconsideration of an order designating a case for hearing [to] be entertained if, and insofar as, the petition relates to an adverse ruling with respect to petitioner's participation in the proceeding." Nothing in Footnote 7 limited the ability of the CII Companies to participate in the hearing. Requests to expand the scope of Footnote 7 are analogous to challenges to the designation of a question for hearing, which are interlocutory petitions that will not be entertained. It is nonetheless incumbent upon us, in response to their arguments in this docket, to explain why we are treating the CII Companies differently from SCRRA with respect to Footnote 7. 36. The CII Companies argue that they are similarly situated to SCRRA such that it would be "an unlawful abuse of discretion for the Commission to allow the railroad to extract itself from the hearing proceeding while not affording the same opportunity to electric utilities and oil and gas companies facing similar federal requirements and spectrum shortages." We recognize that the CII Companies are critical infrastructure industry entities under the Commission's Rules. We acknowledge as well that important public benefits stem from the operation of, for example, SCADA systems by oil and gas companies and smart grid systems by electric cooperatives and other utilities. Although the CII Companies' proposals to use the spectrum licenses for SCADA, smart grid and similar applications would be beneficial to the public, unlike PTC, those other services are not dedicated to communications to prevent human injury and property damage, but are also used for day-to-day facilities management and other purposes that primarily serve the business needs of the licensee. 37. The CII Companies point to their own regulatory mandates for implementation of wireless communications systems, but none has the same federal statutory mandate, grounded principally in a specific public safety concern with an imminent statutory deadline, as PTC. The AMTS frequencies, moreover, are uniquely suited for SCRRA's PTC deployment because they are within the band range (217-222 MHz) of the industry's PTC radio solution. 38. The Commission deliberately limited Footnote 7 to the possibility of removing the SCRRA Assignment Application from the ambit of the hearing because of the particular public interest in facilitating the implementation of PTC. The Commission was aware of the pending applications to assign spectrum licenses from MCLM to the CII Companies, but it did not invite those parties to seek removal of their applications from the hearing. We find, after careful consideration of the record, that on balance removing only the SCRRA Applications from the hearing based on considerations unique to PTC, including the particular frequencies sought, would best serve the public interest. We therefore decline to extend Footnote 7 to the CII Applications. C. Waiver Request 39. Having denied the requests for Second Thursday relief and to expand Footnote 7 relief beyond the SCRRA Applications, we conclude that we need not address the Applicants' request for a waiver of the automatic termination of any site-based licenses due to a failure to construct or a permanent discontinuance of service. We understand that the parties have expended significant time and resources in litigating this issue in the hearing, and that Issue (g) may be relatively close to resolution. At this juncture, therefore, we defer to the presiding ALJ, who has the benefit of the broader record developed in the hearing on this issue, to determine whether there has been any violation of the construction or discontinuance-of-service rules, rather than truncate that inquiry by waiving the construction and discontinuance-of-service rules in advance of a determination as to whether such a waiver is needed. IV. CONCLUSION 40. We conclude that the Choctaw Application may not be processed at this time because the Applicants have failed to demonstrate that the hearing on MCLM's basic qualifications should be terminated under the Second Thursday exception to the Jefferson Radio policy. The Choctaw Application is not eligible for Second Thursday relief because granting the Choctaw Application would likely afford the DePriests a significant financial benefit by releasing Mr. DePriest from his personal guarantees of loans to MCLM. Accordingly, the hearing on MCLM's basic qualifications shall continue, and the Choctaw Application shall remain in pending status until the outcome of the hearing. We remove one of the designated assignment applications from the hearing, however, based on overriding public interest considerations. Specifically, we find that, in accord with Footnote 7 of the HDO, MCLM and SCRRA have made a sufficient showing to justify the removal of the SCRRA Applications in the interest of facilitating the effective and expeditious deployment of PTC. We decline to remove the CII Applications because we find that PTC is distinguishable from the purposes to which the CII Companies intend to put the spectrum, and because removing the CII Applications would greatly diminish the deterrent to licensee misconduct provided by the Jefferson Radio policy. Finally, in light of these decisions, we conclude that we need not address the Applicants' request for a waiver of the construction and discontinuance-of-service requirements for MCLM's site-based stations. 41. We are removing the SCRRA Applications from the hearing, but we are not granting them herein. The Bureau may grant the SCRRA Applications upon a finding that such a grant would be consistent with the determinations in this Memorandum Opinion and Order and the relevant rules. The Bureau should not entertain efforts to relitigate matters that have been addressed here, such as the propriety of removing only the SCRRA Applications pursuant to Footnote 7. Any pleadings that may be filed against the SCRRA Applications that repeat arguments that have been resolved here should be summarily dismissed. V. ORDERING CLAUSES 42. Accordingly, IT IS ORDERED, pursuant to Sections 4(i), 309(e), and 312(c) of the Communications Act of 1934, as amended, 47 U.S.C. sections 154(i), 309(e), 312(c), that the request filed by Maritime Communications/Land Mobile, LLC, Debtor-in-Possession, and Choctaw Holdings, LLC on January 13, 2013 to terminate the hearing proceeding in EB Docket No. 11-71 and consent to application File No. 0005552500 IS DENIED, and that application File No. 0005552500 SHALL BE HELD IN ABEYANCE consistent with this Memorandum Opinion and Order and the Commission's Rules. 43. IT IS FURTHER ORDERED, pursuant to Sections 4(i) and 309 of the Communications Act of 1934, as amended, 47 U.S.C. sections 154(i), 309, that the requests filed by Southern California Regional Rail Authority on May 9, 2011, and by Maritime Communications/Land Mobile, LLC, Debtor-in-Possession on May 12, 2011, to remove application File Nos. 0004153701 and 0004144435 from the EB Docket No. 11-71 hearing proceeding pursuant to footnote 7 of the Hearing Designation Order in EB Docket No. 11-71 ARE GRANTED, and that application File Nos. 0004153701 and 0004144435 SHALL BE PROCESSED consistent with this Memorandum Opinion and Order and the Commission's Rules. 44. IT IS FURTHER ORDERED, pursuant to Sections 4(i) and 405 of the Communications Act of 1934, as amended, 47 U.S.C. sections 154(i), 405, and Section 1.106 of the Commission's Rules, 47 C.F.R. section 1.106, that the Petition for Reconsideration filed on May 19, 2011, by Atlas Pipeline Mid-Continent, LLC, DCP Midstream, LP, Denton County Electric Cooperative, Inc. d/b/a CoServ Electric, Dixie Electric Membership Corporation, Inc., Enbridge Energy Company, Inc., EnCana Oil & Gas (USA) Inc., Interstate Power and Light Company, Jackson County Rural Electric Membership Cooperative, and Wisconsin Power and Light Company IS DISMISSED. 45. IT IS FURTHER ORDERED, pursuant to Sections 4(i) and 405 of the Communications Act of 1934, as amended, 47 U.S.C. sections 154(i), 405, and Section 1.106 of the Commission's Rules, 47 C.F.R. section 1.106, that the Petition for Reconsideration, Request for Removal from Hearing Designation Order, and Request for Grant of Application filed on May 19, 2011 by Duquesne Light Company IS DISMISSED insofar as it is a petition for reconsideration and IS OTHERWISE DENIED. 46. IT IS FURTHER ORDERED, pursuant to Sections 4(i) and 309 of the Communications Act of 1934, as amended,47 U.S.C. sections 154(i), 309, that the requests made on May 19, 2011, by Atlas Pipeline Mid-Continent, LLC, DCP Midstream, LP, Denton County Electric Cooperative, Inc. d/b/a CoServ Electric, Dixie Electric Membership Corporation, Inc., Enbridge Energy Company, Inc., EnCana Oil & Gas (USA) Inc., Interstate Power and Light Company, Jackson County Rural Electric Membership Cooperative, Wisconsin Power and Light Company, and Duquesne Light Company to remove application File Nos. 0004030479, 0004193028, 0004193328, 0004354053, 0004309872, 0004310060, 0004314903, 0004315013, 0004430505, 0004417199, 0004419431, 0004422320, 0004422329, 0004507921, 0004526264, 0004636537, and 0004604962 from the EB Docket No. 11-71 hearing proceeding pursuant to footnote 7 of the Hearing Designation Order in EB Docket No. 11-71 ARE DENIED. 47. IT IS FURTHER ORDERED, pursuant to Section 4(i) of the Communications Act of 1934, as amended, 47 U.S.C. section 154(i), and Section 1.41 of the Commission's Rules, 47 C.F.R. section 1.41, that the Motion to Strike filed on May 30, 2013 Choctaw Holdings, LLC, and the Motion to Strike filed on July 3, 2013, by Maritime Communications/Land Mobile, LLC, Debtor-in-Possession ARE DENIED, and the Request for Leave to File a Surreply filed on July 3, 2013,by Maritime ommunications/Land Mobile, LLC, Debtor-in-Possession IS GRANTED. FEDERAL COMMUNICATIONS COMMISSION Marlene H. Dortch Secretary APPENDIX A Pleadings and Comments Petitions to Deny and Comments Association of American Railroads (AAR) Comments - AAR Comments Council Tree Investors, Inc. (Council Tree) Petition to Deny - Council Tree Petition Critical Infrastructure Companies (CII Companies) Comments - CII Companies Comments Enforcement Bureau, FCC (EB) Comments on MCLM and Choctaw's Second Thursday Submission - EB Comments Enterprise Wireless Alliance Harmer, Peter (Harmer) Shenandoah Valley Electric Cooperative (SVEC) Comments - SVEC Comments SkyTel-1 Entities (SkyTel) Petition to Dismiss or Deny, and Comments - SkyTel Petition Southern California Regional Rail Authority (SCRRA) Comments - SCRRA Comments Spectrum Bridge, Inc. Oppositions to Petitions to Deny and Reply Comments California Department of Transportation, Division of Rail (Caltrans) Letter - Caltrans Letter Choctaw Telecommunications, LLC and Choctaw Holdings, LLC (Choctaw) Reply Comments and Opposition to Petitions to Deny - Choctaw Opposition CII Companies Reply Comments Dunn, Michael P. Maritime Communications/Land Mobile, LLC, Debtor-in-Possession (MCLM) Reply Comments and Opposition to Petitions - MCLM Opposition Riverside County Transportation Commission (RCTC) Letter - RCTC Letter San Bernardino Associated Governments (SANBAG) Letter - SANBAG Letter Sellers, Douglas C. SkyTel Replies to Comments and Procedural Objections - SkyTel Reply Comments SMART-Transportation Division SCRRA Response Teel, James L. Utilities Telecom Council (UTC) Reply Comments - UTC Reply Comments Warren Averett, LLC Replies to Oppositions Council Tree Reply EB Reply to MCLM's and Choctaw's Reply Comments and Oppositions to Petitions to Deny - EB Reply Goad, Fred (Goad) Opposition - Goad Opposition Harmer SVEC Reply SkyTel Reply to Oppositions to Petition to Deny and Reply to Comments - SkyTel Reply SkyTel Reply to Oppositions to Petition to Deny and Reply to Comments Supplement by W. Havens and Skybridge Spectrum Foundation - SkyTel Reply Supplement United States Department of Transportation (USDOT) Letter - USDOT Letter APPENDIX B Applications The following applications are designated for hearing in the EB Docket 11-71 proceeding, or are otherwise relevant to the instant proceeding. In all of the assignment applications, the proposed assignor is MCLM. FCC File No. 0002303355 (filed Sept. 7, 2005, amended Aug. 21, 2006, granted Dec. 29, 2006) - MCLM application for new AMTS licenses. File No. 0004030479 (filed Nov. 13, 2009, amended Dec. 8, 2009) - Partial assignment (partition and disaggregation) of the license for station WQGF316 to EnCana Oil & Gas (USA), Inc. File No. 0004144435 (filed Mar. 11, 2010) - Partial assignment (partition and disaggregation) of the license for station WQGF318 to Southern California Regional Rail Authority (SCRRA Assignment Application). File No. 0004193028 (filed Mar. 31, 2010, amended Aug. 30, 2011) - Modification of the license for station WHG750, filed by MCLM to accommodate Duquesne Light Company. File No. 0004193328 (filed Apr. 21, 2010) - Partial assignment of the license for (site-based) station WHG750 to Duquesne Light Company. File No. 0004354053 (filed Aug. 19, 2010, withdrawn Nov. 10, 2011) - Partial assignment (partition and disaggregation) of the license for station WQGF316 to DCP Midstream LCP. File No. 0004309872 (filed July 6, 2010, amended Aug. 30, 2011) - Modification of the license for station WQGF317, filed by MCLM to accommodate Jackson County Rural Membership Electric Cooperative. File No. 0004310060 (filed July 6, 2010, amended Aug. 9, 2010) - Partial assignment (partition and disaggregation) of the license for station WQGF316 to Jackson County Rural Membership Electric Cooperative. File No. 0004314903 (filed July 7, 2010) - Modification of the license for (site-based) station KAE889, filed by MCLM to accommodate Puget Sound Energy, Inc. File No. 0004315013 (filed July 7, 2010) - Partial assignment of the license for (site-based) station KAE889 to Puget Sound Energy, Inc. File No. 0004430505 (filed Nov. 19, 2010, amended Jan. 31, 2011) - Partial assignment (partition and disaggregation) of the license for station WQGF316 to Enbridge Energy Company, Inc. File No. 0004417199 (filed Dec. 1, 2010, withdrawn Nov. 15, 2011) - Partial assignment (partition and disaggregation) of the license for station WQGF316 to Interstate Power and Light Company. File No. 0004419431 (filed Dec. 1, 2010, withdrawn Nov. 15, 2011) - Partial assignment (partition and disaggregation) of the license for station WQGF316 to Wisconsin Power and Light Company. File No. 0004422320 (filed Dec. 1, 2010, withdrawn Nov. 15, 2011) - Partial assignment (partition and disaggregation) of the license for station WQGF317 to Wisconsin Power and Light Company. File No. 0004422329 (filed Dec. 1, 2010, withdrawn Nov. 15, 2011) - Partial assignment (partition and disaggregation) of the license for station WQGF317 to Wisconsin Power and Light Company. FCC File No. 0004507921 (filed Dec. 8, 2010) - Partial assignment (partition and disaggregation) of the license for station WQGF316 to Dixie Electric Membership Corporation, Inc. FCC File No. 0004153701 (filed Mar. 8, 2010, amended Aug. 30, 2011) - Modification of the license for station WQGF317, filed by MCLM to accommodate Southern California Regional Rail Authority (Modification Application). FCC File No. 0004526264 (filed Mar. 2, 2011, amended Apr. 18, 2012) - Partial assignment (partition and disaggregation) of the license for station WQGF316 to Atlas Pipeline - Mid Continent LLC. FCC File No. 0004636537(filed Mar. 11, 2011) - Partial assignment (partition and disaggregation) of the license for station WQGF316 to Denton County Electric Cooperative, Inc. dba CoServ Electric. FCC File No. 0004604962 (filed Apr. 7, 2011) - Partial assignment (partition and disaggregation) of the license for station WQGF316 to EnCana Oil and Gas (USA), Inc. FCC File No. 0005224980 (filed July 5, 2012) - Partial assignment (partition and disaggregation) of the license for station WQGF315 to Shenandoah Valley Electric Cooperative. FCC File No. 0005552500 (filed Jan. 23, 2013, amended Jan. 25, 2013) - Full assignment of all of MCLM's licenses to Choctaw Holdings, LLC (Choctaw Application). TNS 24KuanRap-140913 30FurigayJof-4859448 30FurigayJof (c) 2014 Targeted News Service |